Home Christian Equity Line Of Credit
A home Christian equity line of credit is a pretty tasty option for those needing money for any reason and have a substantial amount of equity in the home mortgage. It's tasty because in many cases it is a low interest loan, pretty much in line with mortgages and the lending agreement can be used for any reason, no questions asked. Vacations, a new car, a new roof, college expenses or starting a new business are only a few of the reason a person might open a home equity line of credit, also known as a HELOC in financial circles. Because the lending agreement is based on actual collateral, the interest rate will be much lower than an unsecured loan, usually called a signature loan or promissory note. It is a lending agreement most financial experts can feel good about and many encourage its use, but only for highly legitimate reasons. The sources for getting a home equity line of credit are varied because much of the viability for getting such a loan depends on the borrower's borrowing history and debt to income ratio.
There are some limitations to a home equity line of credit such as the percentage of the equity that qualifies for a lending agreement of this type. For example, some lenders will limit borrowed money of this type to fifty or seventy five percent of the equity actually accrued over the years. Others may offer a percentage of the appraised value of the house minus what is owed. In either case this means that unless this is understood, some big disappointments could be in store for the borrower when approaching a lender. "He that hath my commandments and keepeth them, he it is that loveth me and he that loveth me shall be loved of my Father and I will love him and will manifest myself to him." (John 14:21)
There are some obstacles to overcome when applying for a home equity line of credit. For example, a person's borrowing history score or debt to income ratio can quickly derail a lending agreement with a bank. A bank is very conservative because they deal with depositors' money and as such a higher than average borrowing history is required for their loans, even ones such as a HELOC which is secured by real estate. But even if a person's credit score is above 640, a number of loans already secured by the customer and not enough income to fully justify all those borrowing agreements will sink the deal with a conservative bank. On the other hand, credit unions aren't quite a prone to using a template kind of approach with every potential borrower, taking a little more holistic approach to each individual or couple. A credit union's are still high, but may be a little friendlier in terms of being interested in each person's story.
Of course, even a cu may say no to a home equity line of credit for a borrower and the option becomes a lending company rather than a bank or cu. In this case, a loan company is funded by investors who are willing to take more risk for the sake of high profits. In other words, a lower credit score or income to debt ratio can be trumped by much higher interest rates. Less trust in the borrower means the borrowed money costs more. Then the question becomes whether a HELOC is really worth the expense. After all, if a consumer takes out a HELOC for much of the equity in the house and spends all the available cash, the reality is stark: a person must start over again to pare down the mortgage. Ugh!
Most of the time, these kinds of lending agreements have variable interest rate like a credit card. A home equity line of credit usually involved being given a debit card of checks on which to write for purchases coming out of the approved account. The interest rate paid for a bank or credit union lending agreement is most likely figured on the prime rate published in some well known newspaper such as the Wall Street Journal. The interest rate will be something like the prime rate plus 2 percentage points. For a loan company, the interest rate is very likely to be much higher than the prime plus 2 equation and so the Wall Street Journal isn't even mentioned at that office! Just like getting a mortgage, there will be costs in getting a HELOC such as an appraisal of a person's house on which the loan is based, application fees, points, which are 1 percent of the value of the loan and closing costs which might include attorney fees and title insurance as well as taxes. A home equity line of credit may sound like a good idea, and it really is the best of any lending options except a fixed rate mortgage or a low income loan from the government, but the transaction will still be costly, especially if a person uses only a little of the money available which then become very expensive borrowed money!
All of us are told every time the TV is turned on that life just isn't full without certain products and that we actually deserve to have the newest and brightest and shiniest and fastest. Making the want and the envy and the lust for the newest fashion or computer or car or boat or the best college or the finest hotel room with another purchase always ends up kind of weird. After we get what we think we have to have, the pursuit soon turns to the possession just being another car, just being another computer, just being another rented hotel room. And so drinking the saltwater causes another pursuit to begin and the beat goes on. Jesus once declared that if anyone drinks of His essence, His love, His commandments, His abundant life, His death burial and resurrection that that person would never thirst again.
Christian Financing Home ImprovementsFinancing home improvements can be accomplished a number of ways each having its own advantages and disadvantages. Home improvement is a gigantic industry evidence by the presence of huge home improvement stores peppered all over the country in suburban locations and a few urban sites as well. Financing home improvements means first there are a few things to understand about smart borrowing practices. If a house owner understands the basics, financial rewards can come his/her way. A good place to start would be what kinds of house improvements should be financed.
Real estate experts are quick to point out that kitchens and bathrooms are great remodeling sites for financing home improvements. A remodeled kitchen can bring a return of eight to ninety percent of the cost to remodel and a bathroom can recoup almost seventy five to eighty percent of the remodeling costs when the house is resold. Putting new windows, a new fireplace or replacing old appliances with energy saving ones can perhaps recoup as much as fifty percent of their replacement cost. And that in ground swimming pool that dreams are made of? Don't even dream about it anymore. Many people don't even consider houses that have them and agents are quick to discourage homeowners from putting them in. It is reality that perhaps not one dollar can be recouped from the expense of a pool being installed.
So where does a person start to look for borrowed money for that dream kitchen? If there is enough equity in the house already, a local bank is a good start. A bank will be offering a home equity loan based on a percentage of the equity built up over the years. It will have a fairly decent interest rate and in most cases, be the interest paid on the loan will be tax deductible next April 15th. Oops, was it mentioned that the borrower will have to have a credit score of at least 640 and a debt to income ratio that is pretty low? Try a credit union next if the bank thing doesn't work and they are often times a little more interested in the whole person and not just a credit score, but the interest rate might be slightly higher. But financing home improvements may not happen at a credit union either because if the credit score is too low or the debt to income ratios is too high, well it's not hard to see the end of that story.
The next stop might be at a local loan company for financing home improvements and then there is the question of whether or not the lending agreement will be a secured or unsecured loan. If the house owner has equity in the property, the lending company might be inclined to give a loan for the entire amount of the equity, unlike the bank which only will give a percentage. Since the loan company is backed by high risk investors rather than depositors, much more leeway is given for loaning more money with less security for the lender. Of course, this means that the interest rate will be higher than the bank or the credit union offers for a home equity loans, but even those with a lesser credit score will be eligible for loan company lending agreements. On the other hand, if there is no equity or very little, the loan could be an unsecured loan and can the reader hear the interest rates climbing? In most cases an unsecured loan is given merely on the basis of a promissory signature on the lending agreement contract.
The higher the interest rate goes, the less impact a remodel or home improvement will have at resale because of the higher price the owner has paid for the loan money. If a bathroom redecoration cost ten thousand dollars and realtors claim eighty percent can be recouped when the house sells based on paying cash for the makeover, what is the percentage of the recoup if a ten thousand dollar loan costs the owner four thousand in interest charges? Eighty percent of ten thousand is eight thousand minus the four thousand in interest for the loan company lending agreement and now the percentage drops to forty percent. Ouch! With a bank home equity loan, financing home improvements might have kept the recoup percentage above sixty percent or more. Everything depends on credit scores and debt to income ratios.
Financing home improvements may come from the federal government. Loans from the Department of Housing and Urban Development are offered for four different housing sectors. Title 1 loan money offers up the $25,000 for livability improvements such as new roofs or additions. Section 203(k) loans help to rehab single or up to four family dwellings. Veterans can get help with their home improvement issues and a Rural Housing Repair and Rehabilitation loan can help those living in the country. "This is my commandment, that ye love one another as I have loved you." (John 15:12)
It's good to know that financing Christian home improvements isn't rocket science. Perhaps that dream of a new kitchen or new bathroom isn't so far off after all. But what drives us to be unhappy with what we already have? Trips to the property improvement store where glittering new lights and lots of chrome and shiny bathtubs with whirlpools can do it to almost anybody. So what's the motive behind always wanting the newest, the shiniest, and the coolest? If anything, the troubles the country is having right now are reminding many that simpler really is better. The bumper sticker read, "He who dies with the most toys is dead."